Fraud

Events that contributed to the global financial crisis have led to careful examination of how securities firms protect their clients’ assets.

To help regulators improve supervision of such firms, the International Organization of Securities Commissions (IOSCO) published a consultation report, Recommendations Regarding the Protection of Client Assets.

The report, available at tinyurl.com/bntsbyw, describes eight principles to clarify the roles of regulated securities firms—called “intermediaries” in the report—and regulators in protecting clients’ assets.

Although laws to protect investing clients vary across jurisdictions, the report describes the basic responsibilities of intermediaries and regulators. Intermediaries placing client assets with third parties should reconcile the clients’ accounts and records with those of the third party, while regulators must maintain effective safeguarding of clients’ assets, according to the report.